Taking John McCain at his word he believes in a cycle of financial deregualtion, then crisis management. He has been ardently opposed to regulation until last week and now he would like to implement what sounds like a patchwork crisis program of regulation. When the crisis passes I guess we go back to deregulation. (You would expect a guy his age to have more sympathy for the successful regulatory programs of the 1930’s.)
Anyway China appears to have lost confidence in American know-how. It apparently is suspending making loans to U.S. banks. This I think is blowback from a presidential administration that without question is the most miserable failure in American history. The bungling of the Iraq war and mishandling of foreign affairs over the last eight years has led to a well known international lack of confidence in the U.S. Our inability to stem the fall of the dollar has led to international difficulties.
Finally our self inflicted financial crisis after deregulating the most irresponsible institutions cannot be confidence inducing among other nations. For years countries engaged in commerce with us in their own self interest. At this point self interest compells them to suspend such commerce.